Definition
A title search report is the lawful documentation claiming the ownership rights of a property.
It is a legal process to verify the property’s free-holding status which is essential from the business perspective when considering a collateral loan. It is a confirmation that the land is free from any form of restraints like previous mortgages, claims, economic conditions, or any form of debt-associated.
What does it contain?
The title search report is a significant document as it holds essential components having the relevant knowledge of property rights. Only the rightful owner has the rights to mortgage, sell or develop any property. A lender or buyer uses the title search report to establish such ownership before entering into a contract based on the property with the borrower or seller as the case may be. It includes the following:
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Property Description:
It is the accurate description of the property in terms of its history, location, right dimensions, and construction that contributes to a successful title report. This is the base of a title search report as it correctly identifies the property in question.
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History of Ownership:
The history of different land users or property owners revolving around the property is taken into consideration when curating a title report. So, it is advised to carefully probe around the ownership details of the property. It may be pointed out here that different legal jurisdictions may have different legal clauses pertaining to sale, purchase, and ownership of immovable property.
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Property Allayment:
The property should be free of any easements; such as usage of a limited parcel of land, associated parks, trails, or roads. The property should be free of any partial land possessions by any holder in case of any land transactions for businesses in the title report.
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Property Liens:
The property assigned in the title report should not have any outstanding debt associated with it. It impacts the creditability of the land for its ability to take up any financing schemes; such as business loans from lenders or banks.
Meaning, Need and Benefits
Steps Involved in Drafting of Title Search Report
A title search is generally conducted by specialised agencies like title companies at the behest of individuals or companies that require them. The report reveals taxes, liens, property terms, contracts, title defects, record errors etc. There are two bifurcations of the title search report depending on the timespan and the type of parameters covered. It is differentiated into two types:
Limited Coverage Search
The title search report in the limited coverage search category has an authorization of fifteen years. It is a type of simple guarantee title report listing the properties and lands on short-term tenures, re-mortgaging terms and deals. It covers properties with disputes, liens, or history of its usage. Such types of possessions under this coverage can be vacated easily on notice in cases of disputes.
Full Coverage Search
The full coverage search title report has a license of 30 years. It is a detailed overview of the particulars of the property, transaction history, agreements, restrictions, debts, legal disputes or issues, ownership rights, and easements. This report holds accountability for approved property loans and selling and re-selling monetary transactions.
Who Uses the Report?
The title search reports are used by business owners, companies, banks, financial institutions, investors, or potential buyers who are interested in purchasing the property. The selected property is scrutinized for any discrepancies such as loans, debts, easements, legal issues or disputes. This reduces the risk of the lender in case the borrowing company defaults, it can recover the money through the property mortgaged. The lender would also know how many other lenders can claim their rights on the property in case the borrowing company defaults or goes bankrupt.
The title search report is a very crucial report that is referred for any inaccuracy or errors in records which may hinder the monetary proceedings between two parties involving property.
Use of Title Search Report
The usage of the title search report fulfills a variety of purposes in different zones of real-estate possessions. It is used in the following:
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Proprietorship detail:
The report carries the verified information about the owner of the property. It consists of all the essentials such as the ownership details and rights corresponding with the government records. There are supporting documents serving as shreds of evidence such as purchase deeds, sale deeds, conveyance deeds, gift deeds, will documents, deeds of partition and others as per the requirement.
If the property authorization, that is, the power of attorney is in someone else’s name, must be presented in support of the property papers. All the documents should be carefully examined, registered and stamped.
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Chain of title reports
The title search report holds significance when there are a lot of property holders linked with one property in possession. If there are multiple buyers associated with the property from the first owner to the next two or three buyers; needs to be presented supporting the title report. All the deeds to be attached including the mother deed, sale deeds, and purchase deeds of the last three transactions with the supporting or linked documents. The proprietorship will stand invalid if there is any inconsistency in the linked papers with the title report.
All the contributing documents or deeds in the chain of title reports shown by the owner should be certified. It is either advised to look out for the property’s original papers or arrange from the Sub-Registrar’s office to avoid any legal mess.
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Rights of the property transferor
The nature of the right of the property transferor should be taken into perspective while going for a property transfer. It offers accuracy and reliability regarding the whole rights of the property transferor and whether the selected property is transferable or not. Rights and Mutation records can be of assistance for the verification of property transfer and the rights of the transferor.
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Legal competency of the property owner
The owner of the property should be sound and competitive enough for the execution of the sale and purchase agreements. The title search report criteria is a mandatory criterion for verification of credentials where there is involvement of immovable properties such as mortgages, leases, and high debts associated.
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Nature of property and land use
Title search report is inclined towards certain criteria such as appropriate land use and type of property. Privately owned and Government-owned properties are under the government obligations to be used for buying purposes else they stand at a void ab-initio.
There is a variation existing in the way the land is used, broadly categorized into agricultural and non-agricultural land. Non-agricultural land categorized properties are either used for residential, commercial, industrial, institutional and other. Any land categorized under the agricultural category needs government authorization for permitting it to be used as a residence. Hence, title search report validation is a necessity to determine the status of the property.
Importance of Title Search Report
The importance of the title search report stands for the current or the right status of the property. The status reveals any impending uses of pending payments and legalities. It showcases the arrears associated with the land possessions and hence, aids in making a credible choice.
The need for this documentation lies in its ease of convenience to its investors, lenders, or buyers belonging to small or bigger enterprises. It favours the timely execution of the agreements, deals, or any payments due to the thorough clarification and verification of the report. It is a cost-effective representation of the variety of specifications approved in a single entity.
The title search document uncovers the complicated aspects; such as the identification of any fraudulent property documents or transactions. The search goes into much detail about information related to old or hidden associated debts or the undisclosed legal battles or disputes ensuring the rightful ownership of the properties in the real-estate business.
Conclusion
Title Search Reports holds a very important perspective considering the different zones existing in the real estate and loan collateral market. It is an important reference in consideration to achieve a profitable choice in business. It curates a strong foothold in attaining the ownership rights and responsibilities of the property. The report confirms the land and property use is free from debts, legal claims, insufficiencies, defects, and encumbrances. The title search report reassures that no third parties have any claims over the property in question, providing security for parties involved in the deal or transaction entered into by the two parties – lender and borrower.
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